A decade-long court case on the legality of Kentucky's racetrack gambling parlors may finally be coming to a head.
The Kentucky Supreme Court on Friday heard oral arguments between the Family Foundation, a conservative group that opposes expanded gambling, and the tracks, which have been operating the slots-like electronic gambling machines since 2011.
A ruling could take months.
"It's time to bring certainty to the legality of the historical horse racing system and the Exacta betting system," Stan Cave, attorney for the Family Foundation, told the court. "What has happened here is just plain wrong on every level."
This was the second time the issue has come before the state's high court. In 2014, the court sent the case back to Franklin Circuit Court after finding that the Kentucky Horse Racing Commission can regulate the games if they are pari-mutuel.
Known as historical horse racing, the machines were approved by the racing commission under Gov. Steve Beshear. They've grown from a few hundred at Kentucky Downs in Franklin to more than 2,800 before the coronavirus pandemic limited forced the tracks to shut down some terminals.
It's not 'instant racing'
The original gambling system, which was called Instant Racing, is no longer used in Kentucky. Instead, the state allows Exacta, Parimax and Ainsworth gambling systems, all of which resemble electronic slot machines in sounds, lights and style of play.
As of July 31, more than $8.6 billion has been wagered at the gambling parlors, with most of the money returned to gamblers in the form of winnings. The rest has been kept by the tracks and by the state; almost $125 million has been generated in taxes, with $48 million going to the state's general fund.
The racetracks have invested millions in gambling parlors at The Red Mile in Lexington, Ellis Park in Henderson, Derby City Gaming in Louisville, as well as Kentucky Downs, with more planned for Turfway Park in Florence, Churchill Downs in Louisville and a new facility near Fort Campbell.
Case to decide if games are pari-mutuel
The Family Foundation contends that they are all illegal and is asking the state Supreme Court to overturn a ruling by Franklin Circuit Court Judge Thomas Wingate that the Exacta games are pari-mutuel.
It is unclear exactly what the impact of the ruling in this case will be on other brands of games, which work slightly differently.
But all of the games work on the premise that the winning is determined by randomly selected previously run horse races.
The tracks and the Kentucky Racing Commission contend that the wagers are pari-mutuel, with bettors essentially betting against each other rather than against the track.
Cave argued that because players at gambling terminals aren't betting on the same races, the games are not pari-mutuel, and that Wingate had misapplied the standard in finding them so.
Attorneys for the tracks and the racing commission argued that the definition approved by the court in 2014 does not require bettors to be betting on the same race.
Doing so would mean that commonly used exotic wagers with carry-over pools, such as the Pick Six or Daily Double would be illegal in Kentucky, argued attorney Jay Ingle, who represented the Red Mile, Kentucky Downs and Ellis Park, which use the Exacta system.
Where's the General Assembly?
The court asked attorneys for both sides to weigh on what it means that the Kentucky General Assembly has not taken up this question.
"It's been 10 years and the General Assembly has not spoken on this," said Justice Michelle M. Keller, one of three sitting justices also on the court that issued the 2014 opinion. "That's not lost on me ... Of what import is it that the General Assembly has not spoken on this?"
Cave said that if the General Assembly wants "slots-type gaming then the General Assembly should act."
Ingle said that "it speaks volumes" that lawmakers have not acted.
"The General Assembly has been aware of the use of the games for nine years and this opinion for six years ... and the GA pays attention," Ingle said. "If it doesn't agree, it passes a new statute. If they thought historical horse racing terminals should be illegal, they would have said so."
Earlier this week, Gov. Andy Beshear said he hoped the Kentucky Supreme Court would find that the games are legal.
